Did you know that the demand for second homes has gone up more than 75 percent since before the coronavirus pandemic? We are in a hot real estate market that doesn’t seem to be cooling any time soon.
And with mortgage rates going up but still at relative lows, it’s important that buyers know how to get a second home mortgage.
A primary home mortgage is not the same as a secondary home mortgage. Luckily for you, we’re here to help navigate you through the various rules and requirements so that you can land the second home of your dreams.
If you’d like to learn more then keep on reading and we will take you through everything that you’re going to want to know!
Mortgages on Primary Residences vs Second Homes
With your primary mortgage, depending on your credit, you might be able to put down as little as five percent. When it comes to buying a second home, you’re likely going to need to at least put down ten percent.
A second mortgage usually adds more financial pressure on homeowners. Lenders tend to look for a higher credit score for a second mortgage.
Also, your interest rate on a second mortgage is probably going to be higher than on your first mortgage. You might be able to utilize mortgage refinancing to get more money for a second home.
Other than that, the process of applying for a mortgage for a second home is similar to applying for a primary mortgage. Just like with any other loan, you want to do your research and talk with various lenders to learn more and find the loan that is going to be best for you.
Qualifying for a Second Home Mortgage
Before you apply for your second home mortgage, look over your credit score, income, and assets. When you go home buying for a second house, you’re probably going to need some extra money in reserve to cover mortgage payments in case you temporarily lose your income.
You should have at least two months of reserves.
You might want to offset your expenses by renting out your second home when you’re not using it. However, you first need to review the terms of your mortgage. If your home is listed as a residence and not an investment property, you might not be able to rent out your home.
Usually, to qualify as a second home, your house needs to only belong to the buyer. It can’t be run by a management firm or rented out to tenants. Also, you need to live in the house for at least part of the year.
Make Sure You’re Qualified for a Second Home Mortgage
If you want to obtain a second home mortgage, you’re going to need to make sure that you have the credit and funds to secure it. By making sure that you check all of the boxes and follow the necessary requirements, you should have an easier time getting the mortgage.
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